With Hong Kong’s real estate 70% over market value, I have been baffled as to how there are not homeless people sprawled across the street when I walk home at night. With land mass roughly the size of Los Angeles, the city-state has roughly twice LA’s population with over 7 million people.
While I balked at the $5,000 per month people in Central pay to rent on room apartments, expats, especially those with family who have been living here for decades have made fortunes out of banking and real estate. This to me meant that people who could not afford this rent would move out to other regions. But what about the majority of people in Hong Kong who make the median income of US$17,500 (Information Services Department for Hong Kong SAR, 2009)?
The answer, as my coworker matter-of-factly told me, likes in subsidized housing. About half of the 40 story skyscrapers we see around Hong Kong are lower-priced housing. These housing projects began in 1953 when a fire destroyed the homes of thousands of Chinese refugees (Wikipedia).
The government has also created what is known as a “Sandwhich Class Housing Scheme”, which allows those who are lower-middle to middle class who do not qualify for the public housing to buy these properties below market value. While these homes were popular, the government stopped the project in 2000, much to the chagrin of Hong Kong residents, who want the government to continue building such properties.
Despite the sky-high prices that leaves people with little savings, the good news (or is it?) for homeowners is that Hong Kong real estate prices are growing rapidly. One of my coworkers, a newlywed, purchased an apartment in New Territories for about US$100,000. He says the market price for the house since then has already doubled. Newspapers everyday, warn about the real estate bubble bursting, which would leave Hong Kong residents with a small space and no savings to show for it.